“Up to 50 million jobs are at risk across the globe, which represents a reduction in jobs from 12 to 14%.”- WTC (World Travel and Tourism Council)
The tourism industry has always created a spike in the economic growth of major countries and has been majorly contributing to their overall GDP. The onset of the pandemic swiped away the potential growth of the tourism and hospitality sector in the economy. According to previous data and statistical analysis, India, as a developing country, showcased an attraction of 10.5 million foreign visitors, whereas 1.8 million Indians travelled within the country. In light of COVID-19, the Indian tourism industry was projected to book a revenue loss of ₹1.25 trillion in 2020 with a study from CARE Ratings noting that there would be a 40% decline in revenue, compared to 2019.
Along with the loss of revenue, there was, and still is, a drastic loss in human resources as well. The industry employs an estimated count of 38 million people which is after excluding the number of aviation and luxury hotels that do not fall in the count of MSMEs. When the global economy was already seeing a slowdown and was about to enter a recession phase, COVID-19 came up as a fast forward button to it. A total of 50 million jobs are at risk at the global level and the industry was shutting down. If this didn’t add to the concerning risk of employment, then what would?
In 2020, major countries locked their borders and along with it, they have locked down permits for international travels. This sector of each country is the most adversely affected with an approximate 25% loss of revenue in the entire industry. Now questions like, “Will the tourism industry ever see its boom again?” or “Would domestic travel be the new norm?” demands an answer too. And in a way, this is what the blog attempts to answer.
When we come to the details of examining the loss, there are specific areas that would incur a loss that is comparatively heavier than the others in the same industry. Speaking of the type or purpose of the travel, leisure travel is the worst-hit kind with a slightly better hope in the business travel that would lift up the tourism market.
The crowd has dropped down their travel plans for vacations and holidays for safety concerns whereas business meets and travels are being reduced by the advent of new-generation video conferencing apps. The need to mobile from one place to another is substantially reduced and only the urgent ones are being considered. In this way, big businesses are not only cutting down their travel costs, but also the employment cost that was incurred in order to conduct the meet. The MICE (meetings, incentives, conference/conventions and exhibitions/events) market is seeing a tremendous break, keeping in mind the specifications of social distancing.
Areas, where COVID-19 could have less impact on the tourism industry, would be South East and Middle East Asia, where there are comparatively fewer cases. With the onset of social distancing directives, places that are less crowded and have natural abundance would witness more growth and brands with outdoor visibility like ITC hotels, Taj, Oberoi, Airbnb and most home-stays are likely to benefit in such cases. Businesses associated with destination weddings and religious trips have also postponed customer plans, which, in turn, affects the big money dive of the industry. The self-driven accommodations and home-stays in the hospitality segment reduce the risk of virus considering the smaller areas of the establishment.
On the global level, it has an adverse and even more diverse consequence. Giant events like the Olympics that draws mass attention and interconnected business matters, got delayed until 2021 with a major drop in those allowed to physically watch, with a ban on tourists and local crowds at the megaevent. The Japan Tourism Agency estimated that the total number of visitors to Japan in 2020 was only 4.1 million, which was the lowest since 1998 and the Japanese government was all set to welcome 40 million visitors, though the COVID-induced tourism crash made sure this was not possible. This backing off of such a huge attraction printed loss slips not only for the host city of Tokyo but also the entire world.
The Summer Olympics 2020 was to open the doors of the tourism and hospitality sectors and around 7.5 million tickets were reserved for the Summer Games, which, on the weighing scales, would uplift the demand for accommodation facilities in and around the city and thereby promote a boost for the hospitality sector and a significant growth in the overall economy. With so much to work on and getting ready to manage such a huge spike of tourists in the country, hotels like Okura were spending an amount up to $1 billion for renovations and expansions to accommodate the tourists, but with the cancellation of the Summer Games, all of these planned costs were in vain, having less demand and more supply.
Asics- the brand responsible for the uniforms of athletes, designed an eco-friendly way of promotion by using recycled clothes as raw products. Japan also conducted the “Tokyo 2020 Medal Project” for the first time in the history of the Games with 100% recycled metals from used devices like cell phones used as a donation from the people of Tokyo. A Maglev train was all set to launch during the first ceremony of the Games from the very first station of the city. The Summer Games 2020 was an opportunity for Japan to have an economic stimulus and boost up its tourism industry again, but with the whims of the pandemic, it was all for nought.
Similar incidents like the cancelling of the Expo in Dubai created debts to the country as a whole. On the other hand, the United States, a country that welcomes one of the higher numbers of tourists, was expected to undergo a loss of 5.9 million jobs in the tourism sector and a revenue loss of approximately $910 billion.
After so much loss in the tourism industry, the cancellation of tech events like WWDC 2020- Apple’s developer program that invites developers across the globe and has a footfall of thousands, took turns with the advancement of technology and now is likely to conduct it online in respect of prevention from the potential spread of the disease. This not only reduces the engagement of the developers but also largely hampers the hospitality sector of San Jose that expects its major tourists during this time of the year to serve as accommodation options for the guests. The city also witnessed job cuts of more than 13,000 people on an estimate due to the cancellation of the event. Similar events like Google I/O 2020 and Mobile World Congress 2020 were badly hit by the virus in a similar manner.
Talking about cab services, companies, like Uber, have laid off around 6700 employees across the globe in order to cut down their expenses and lower their loss percentage. On the other hand, one of their biggest Indian rivals Ola, too, took some similar steps, thereby creating a dearth of employment opportunities at both the country and global level.
With the halt of domestic and international travel, the airlines have reduced and stopped their operations as well. This folds up to their losses on one hand and on the other, reflecting its demand, the price of turbine fuel, that is required to fill in the tanks of the flying machines, is also reduced in the global market.
It's been almost a year and a half since COVID-19 was declared a global crisis. WHO (World Health Organisation) declared the outbreak a pandemic on 11th March 2020 and the world saw a global lockdown and an emergency all at once. As the layers increased in numbers and no solution was found, gradually, all mass events turned down their plannings and provided thought about social distancing. Apple’s giant tech event WWDC 2020 took a call on conducting the event on the online platforms on 13th March, and soon later Tokyo Olympics 2020, was called off and postponed on 24th March too. A similar chain of events took in spirals and led to a heavy downfall of the tourism industry across the globe.
Coming to the points where development is a scope, or laying down an expected time of the same, in a 2020 article published by ‘The Hindu’, the Association of Tourism and Trade Organisation of India (ATTOI) came up with a proposal of a scheme- ‘Keralam Kaanaam’ brought up by the hotels in the State, to reopen the services offered by high-end boutique hotels and resorts to domestic tourists, and offering them never seen discounts on prices like Rs, 10,000/ night to match the affordability of local guests. In this manner, it seems to encourage domestic tourism until normalcy returns.
Contrast this with places like Goa and Himachal. 40% of the entire Goan population depends on the tourism industry but the central government declined to release any concession or relaxation of fees for the same. The government replied to it by saying that, "Goa is witnessing this decline in international tourists since last year, and COVID-19 has mere effects on it." Here, there’s a fact to keep in mind! Goa has the biggest international tourist industry in the country, which holds a record of 40% of state revenue from the same industry in the year 2018. If we talk about the same on the global level, Spain, despite being one of the worst-hit countries by COVID-19, has opened its doors to its European tourists from 21st June 2020, with effective measures taken. This is possibly one big step to revoke the tourism industry in the country.
When we look at all the perspectives, the opinion that comes later is much more accurate. And while giving light to it and getting through the data released by UNCTAD, world tourism could lose 1.5% of the global GDP (Gross Domestic Product). The world witnessed a 60% loss of international tourism in the financial year of 2020 and could even rise to a loss of 80% if recovery is delayed
Coming to the facts and considering the economical benefits that Japan would have experienced if the Olympics happened normally in 2020, the country’s economy could have regained its spirit and replicating its history of 1964’s Olympics, it could have taken the bars of its economy to a higher spectrum of growth and development and could have widened its door for the country’s overall tourism industry.
The mass footfall would have demanded equal accommodations and infrastructure facilities, which in turn would have helped in the blooming of the hospitality sector along with rapid growth of real estate and builders and construction’s normal rates. There would have been more demand and an increase in the following supply considering the faster circulation of money in the economy.
Similarly, after the estimation of all the above data, and finely devised analysis, standing on the issues of revamping of the tourism industry, it can be observed that air travel could come a little more expensive than usual, accompanied by a possible hike in travel insurance as well. The travel insurance section is likely to see both ways. Due to the high risks of cancellation and postponement of the plans and medical emergencies the tourists would be in demand of policies that could cover the likely costs of such happenings considering the spread of the Coronavirus.
And on the other hand, due to the less demand for travel plans, the demand in the travel insurance section would be directly proportional to the tourism industry as well. And with the fear of COVID-19 and looking at its repercussions and abiding of the social distancing norms, all the airlines are guided by the aviation ministry to maintain a seat gap between its passengers, which would reduce 33% of its total capacity of passengers, and is likely on giving leverage of increasing the baggage allowance per passenger in order to retain its customers. As a part of the alluring policies to its passengers, airlines might now reconsider their meaning of hospitality and indulge in beneficial upgrades and freebies.
The luxury hotels,post the unlock phase, can be predicted to go cheap in the initial months, to cover losses. And to dig a little deep, considering the adverse effects of climate change simultaneously, the big shoots has an opportunity to pivot in new ventures like health centres/farms, spas, nature villages, as people post COVID-19 are expected to rejoice their freedom in the open arms of nature rather than the four walls of the hotel or resort rooms.
Coming to decide the major losers of the effect, marine travel ought to be the biggest sit back amidst all, affecting the revenue generated by cruises in a lot. After all the study, it can be summed up as, in the near future, bracket of two years at least, up till the actual normal is achieved, domestic travel is where the focus shall be. Near the city, travel would be encouraged and short weekend trips would possibly be the substantial focus.
So, in summing up all, there’s one thing for sure, and that is that the prices of every product and service offered are going to reach a spike, as everything is done would require levels of hygiene check and sanitization would become the new mandate. The tourism industry would take turns on its own and come up with clear options of domestic travel and especially in India, “Atma Nirbharta” would see its new way around! And from a wider angle, the countries would have to serve themselves first in order to run a safe and sound economy. So, to answer the questions 'Will this be the new normal now?’ and ‘ Is domestic travel the future?’: Well, maybe yes! If you speak for the new economy, then this way of travel is your new normal now!